Review: Is this the end for MLM Forever Living UK?

Business

Is this the end of the line for MLM Forever Living in the UK? We review the company’s finances and explore the reasons why it’s struggling now.

Over the past seven years we have been investigating the multi-level marketing (MLM) industry. And over that time we’ve noticed a dramatic decrease in their fortunes.

This is across the board in companies and countries – particularly mature markets like the UK, USA and Australia. Even the UK’s DSA’s own figures agree, showing a sharp decline in the industry’s numbers.

But why is this? And how has the company Forever Living in particular fared? To find out we explore the three reasons we believe are behind the slow death of the MLM industry, and review Forever Living UK’s finances over the years.

Three reasons why MLMs like Forever Living are failing

So why are so many MLMs struggling right now? We think there are three key reasons for the decline of MLMs.

1) The market is saturated

The success of MLMs over recent years has been fuelled by the mass adoption of social media, and the access that gave distributors to a much wider market. But the pool of potential people in mature markets like the UK and the USA has now been over-exposed to MLMs, leaving fewer prospects.

There are few people today who aren’t already aware of MLMs, and those who may be inclined to join have usually already been approached. The industry’s high churn rate (in 2005, Herbalife admitted that it had a turnover rate of 90% of distributors who were not supervisors, and 60% of supervisors) also means that many potential victims have already been burned by an MLM.

Or they may have simply run out of money to invest in another business, due to their prior losses with an MLM. Whatever the reason, the market saturation means there’s continually slimmer pickings for distributors to recruit from.

2) A vocal anti-MLM movement

Over the past few years there has been a growing anti-MLM movement that incorporates everything from documentaries like Betting on Zero and Secrets of the Multi-Level Millionaires, international conferences, podcasts, such as The Dream, investigative articles like our own, mass media coverage, YouTubers and TikTok accounts, and Facebook groups.

The anti-MLM movement has cast a cold, critical light on how MLM businesses recruit and sell, the quality and value of their offerings, the tactics used by distributors, and the culture within the organisations.

This has raised awareness of the negative side of the business, such as the purported 99% loss rate of people who join, and emboldened people to say no when offered products to buy or the opportunity to join an MLM, making sales and recruitment much harder.

3) Increased legislation

Authorities have been very slow to catch onto, and clamp down on, MLMs in our opinion. But there are positive signs of change.

In 2015, the Federal Trade Commission (FTC) in the US sued MLM Vemma Nutrition Company. The company settled with the FTC and agreed to “end the business practices that the FTC alleged created a pyramid scheme”. Vemma was ordered to pay a US$238 million fine, restructure its compensation plan, and forfeit some company assets.

In 2016, the FTC also forced Herbalife to restructure its multi-level marketing operations and pay $200 million to former distributors. The FTC’s claimed the company’s MLM compensation structure was unfair because it rewarded distributors for “recruiting others to join and purchase products in order to advance in the marketing program, rather than in response to actual retail demand for the product, causing substantial economic injury to many of its distributors.”

In 2019, Italy’s Competition and Market Authority (AGCM) fined companies trading under the Juice Plus + brand with a €1m penalty, citing dubious marketing practices that were in breach of EU advertising law.

And in 2021 LuLaRoe settled out of court for $4.75 million after being sued by Washington Attorney General’s office for being a “pyramid scheme”.

There is also pressure on the FTC to include MLMs in their Business Opportunity Rule. The rule says that if you offer someone an opportunity, such as joining your MLM, you need to:

  • Provide proof of any income claims you make
  • Disclose if the company has been involved in certain legal actions
  • Detail their refund and cancellation policy
  • Provide a list of at least 10 other people who have bought in

This needs to take place seven days before the person you’re recruiting pays any money or signs anything.

All of this seems good business practice to us, and is a requirement in other industries, but so far MLMs have got away without the need to provide this information. And there is good reason why the industry is fighting hard to avoid being included in the Business Opportunity Rule. Because if the truth about the ‘opportunity’ people are selling is really made clear, we doubt anyone would join.

Collectively these court cases, agreements and creeping legislation mean that things are only likely to get harder for MLMs… we hope!

Are Forever Living UK’s top distributors in financial trouble?

Now we’ve looked at the industry as a whole, let’s focus on one company: Forever Living in the UK. There have been signs that the aloe vera MLM Forever Living UK may be struggling for a while. As we cover in greater depth here, many of the companies top managers have seen their fortunes fall in recent years.

Despite attempting to project an image of success and wealth, their personal finances appear to be in dire straits. One of Forever Living’s former top stars is having to sell her dream home – we suspect to pay off her debts – and her company accounts are overdue:

An attempt to close the company down has received an objection. This could be due to unpaid tax, a bank loan and overdraft of around £35,000 (shown on her last submitted accounts), or a director’s loan taken from the company. Whatever the reason, it certainly doesn’t look like an ongoing, viable business for her.

Indeed, despite failing to submit accounts for this company, she’s since registered a new company, seemingly unrelated to Forever Living, with Companies House.

Another top Forever Living distributor who in years gone by had collected cheques of over $1 million on stage, has put her “dream home” on the market too. As of 2022, she had an outstanding director’s loan of £217,043. (We track the decline in her bonus cheques further down.)

And yet another top Forever Living distributor, who has collected cheques of up to $490,000 in the past, has left the company. Her last set of accounts for her Forever Living business show her as owing creditors over £145,000. And her second business (selling planners to predominantly MLM distributors) is late filing its accounts too:

Its last accounts showed the company owing over £41,000 to creditors, including a bank loan of over £12,000. On top of this, there is an outstanding director’s loan of over £72,000.

These are/were some of the company’s top distributors, and if they are struggling to make the business work – as it appears from the debt they seem to have accumulated and the need to sell their houses – then things don’t bode well for less successful distributors, and anyone joining the business now.

We review Forever Living UK’s accounts

This all tracks with the fortunes of Forever Living UK, when we review their finances on Companies House. Here’s what their accounts show in terms of sales over the past 10 years:

  • 2013: Sales rose by 27%
  • 2014: Sales rose by 70%
  • 2015: Sales rose by 81%
  • 2016: Sales decreased by 25%
  • 2017: Sales decreased by 47%
  • 2018: Sales decreased by 24%
  • 2019: Sales decreased by 24%
  • 2020: Sales rose by 11%
  • 2021: Sales decreased by 11%
  • 2022: Sales decreased by 19%

Aside from a brief and small increase in lockdown, as you can see the company’s sales have been steadily plummeting since their high in 2015.

To give you a picture of their current financial state, their operating profit in 2012 was £1,147,392, compared to £417,552 in 2022. Their turnover also paints a stark picture; in 2012 it was £34,726,349, but by 2022 it has shrank to £19,643,954.

So that means:

  • Their operating profit in 2022 was £729,840 lower than in 2012
  • Their turnover in 2022 was £15,082,395 lower than in 2012

Forever Living UK’s turnover in 2022 is the lowest in 20 YEARS!

Not only is Forever Living UK’s 2022 turnover lower than 2012, it hasn’t been as low for more than 20 years:

  • 2003: £21,590,848
  • 2004: £24,057,473
  • 2005: £22,075,927
  • 2006: 21,413,028
  • 2007: £22,082,569
  • 2008: £22,682,489
  • 2009: £23,412,358
  • 2010: £24,157,199
  • 2011: £23,878,750
  • 2012 £27,167,812
  • 2013: £34,726,349
  • 2014: £58,993,590
  • 2015: £106,489,238
  • 2016 £80,066,133
  • 2017: £42,553,600
  • 2018: £32,193,744
  • 2019: £24,510,601
  • 2020: £27,466,360
  • 2021: £24,139,971
  • 2022: £19,643,954

Here’s a visual demonstration of how the company’s turnover has risen and fallen over the years:

It is clear to us from this diagram that the glory years were a temporary peak. And with the entire MLM industry struggling right now, we don’t foresee that peak returning.

How one top distributor’s bonus cheques highlight the decline of Forever Living UK

To give you another picture of the changing fortunes of Forever Living UK, here are the size of the bonus cheques the UK’s former number two distributor has earned over the years:

  • 2013: $4,440
  • 2014: $45,762
  • 2015: $682,012
  • 2016: $1,007,066
  • 2017: $677,108
  • 2018: $430,108
  • 2019: $457,593
  • 2020: not disclosed
  • 2021: $153,228
  • 2022: not disclosed

Bonuses are calculated based on a percentage of the company’s profits. As you can see, the size of the cheques track with the increase/decrease in sales. The only anomaly is 2019, after the company changed how they awarded cheques to give higher earners, such as this distributor, a larger share, and smaller distributors less.

We believe this was an attempt to hide their falling fortunes and protect the headline-grabbing large cheques, which are used by distributors as a recruitment tool.

Forever Living’s latest income disclosure statement shows a decline

It’s not just the UK market that is suffering either, from the looks of the latest Forever Living income disclosure statement. We calculated the earnings off people who join the company based on their numbers they provide:

  • 89.8% earned nothing
  • 1.76% earned less than $42 a month
  • 4.22% earned more than $42 a month
  • 2.91% earned an average of $111 a month
  • 1.26% earned an average of $1,670 a month
  • Less than 0.04% earned $31,235 a month

To compare, these are the figures from their income disclosure statement in 2019:

  • 88.6% earned nothing
  • 7.86% earned an average of $105 a month
  • 3.42% earned an average of $1,493 a month
  • 0.2% earned an average of $28,512 a month

More than 1% more now earn nothing in an average month, while the number of people right at the top has shrunk from 0.2% to 0.04%. The number of people hitting the middle earning ranks has dropped too.

So, if 100,000 people join Forever Living this means:

  • 89,800 would earn nothing
  • 1,760 would earn less than $42 a month
  • 4,220 would earn more than $42 a month
  • 2,910 would earn an average of $111 a month
  • 1,260 would earn an average of $1,670 a month
  • 40 would earn $31,235 a month

Here’s a visual representation of the average monthly earnings of 100,000 people in Forever Living, according to their income disclosure statement:

To put this into context, the average salary of a waitress in the US is $31,200, or $2,600 a month. To earn at least this from the Forever Living compensation plan, you would need to be in the top 1% of the company.

So, according to their income disclosure statement, if 100,000 people join Forever Living, it looks like only 40 would earn more than a waitress.

Are Forever Living UK’s fortunes fading permanently?

In an effort to recover their fortunes, Forever Living UK has brought in a new country manager. But is that enough? With a turnover 43% lower than 2012, and a far tougher market, personally we can’t see the glory days returning.

So what will happen to Forever Living in the UK? Will they, like the Body Shop and Cambridge Weight Plan, have to downsize their UK operations? Or do they risk going out of business, like Tupperware?

One thing seems certain to us: the high earning days of Forever Living in the UK look like they are over – and indeed the MLM industry as a whole. And as far as we are concerned, that is only a good thing.

Read more about MLM Forever Living

You can read more about MLM Forever Living in these articles:

Hannah Martin is a media expert on multi-level marketing (MLM). She’s been investigating MLMs since 2016 and has appeared on the BBC’s Woman’s Hour speaking about MLMs. 

She was on the steering committee for the world’s first global MLM conference and has helped journalists and TV producers create investigative content into the MLM industry, including the BBC documentary Secrets of the Multi-Level Millionaires: Ellie Undercover. 

Photo by Mariia Zakatiura